Tracking Your Money & Keeping Records

Understanding Cash Flow

Cash flow is the movement of money into and out of your restaurant or pub. Sales may look strong while cash is still tight. A busy Friday night creates cash from guest checks, but that money must cover food deliveries, beverage invoices, payroll, rent, taxes, credit-card fees, repairs, and loan payments. If more cash leaves than enters, your business can run out of money even when the income statement shows a profit.

Track cash by timing, not just by total sales. Toast POS or Square POS can show daily sales, payment mix, refunds, discounts, tips, and deposits. Your bank account shows when funds actually arrive. These dates are not always the same. Credit-card deposits may arrive one or two days after service, while a produce vendor may require payment on delivery.

The Importance of Basic Records

Accurate records are the operating map for your restaurant. Keep daily sales, cash deposits, credit-card settlements, invoices, payroll, rent, utilities, taxes, loan payments, and owner withdrawals in one system. Match the POS report to the bank deposit and investigate differences immediately.

Your records should also show the numbers that drive restaurant profit. Food cost percentage is food purchases divided by food sales. Beverage cost percentage is beverage purchases divided by beverage sales. Labor cost percentage is wages and payroll taxes divided by sales. Prime cost percentage combines cost of goods sold and labor. Many operators watch a prime cost target near 55% to 65%, but the right range depends on service style, menu mix, rent, and local wages.

Separate sales from tips and sales tax. Tips usually belong to the team, and sales tax is money collected for the government. Neither should be treated as operating cash. Record voids, comps, discounts, gift-card sales, and refunds clearly so a busy shift does not hide leakage.

Real-World Scenario

Imagine a neighborhood pub with $42,000 in monthly sales. The owner sees a healthy number and orders extra craft beer for an upcoming festival. Then payroll rises because of overtime, a refrigeration repair is needed, and the distributor invoice comes due before the festival sales arrive. Without a cash schedule, the owner may delay a vendor payment or miss payroll.

A weekly review would show the problem early. The owner compares Toast sales and deposits with the bank, lists invoices due in the next 30 days, checks the next payroll amount, and updates the cash forecast. The owner may reduce the beer order, move a nonessential repair, or arrange vendor terms before the account becomes short.

The Bootstrapper's Ledger

Use a simple weekly cash ledger even if you have an accountant. Start with the actual bank balance. Add expected deposits from completed services. Subtract payroll, vendor invoices, rent, taxes, loan payments, utilities, repairs, and planned purchases. Record the expected payment date beside every item.

This reveals your burn rate and cash runway. Burn rate is the average amount of cash the business uses during a slow period. Cash runway is the number of weeks or months the business can operate using available cash if sales fall sharply. A restaurant should also keep a reserve for equipment failure, seasonal dips, and unexpected labor costs.

Review the ledger every Monday. Use a 13-week forecast for a clearer view than a single month. Update it after each payroll, major delivery, event booking, or unexpected repair. Keep personal spending out of the business account and label every owner draw.

Forecasting and Decision Making

A forecast turns records into decisions. Before hiring another bartender, compare the expected sales lift with added labor cost. Before extending hours, estimate sales by hour, labor cost percentage, utilities, and product waste. Before launching a special, calculate its recipe cost and expected contribution margin.

Use the forecast to plan for slow seasons, tax payments, insurance renewals, annual licenses, and equipment replacement. Review prime cost at least weekly and the full profit-and-loss statement monthly. If cash is falling while sales are rising, check inventory purchases, payroll scheduling, vendor terms, credit-card timing, and owner withdrawals.

Conclusion

Good records do not require complicated accounting knowledge. They require a fixed routine, clear categories, and honest numbers. Reconcile the POS, bank, cash drawer, payroll, and invoices every week. A restaurant that knows its cash position can protect payroll, negotiate with suppliers, price its menu properly, and grow without gambling the next service.

Example scenario: A pub expects a strong holiday weekend but must pay a food distributor, biweekly payroll, and sales tax the following week. A 13-week forecast shows the exact low point, allowing the owner to reserve cash and avoid taking an expensive emergency loan.